IMF’s Unfair Game With Ukraine May Bury Its Reputation - German Media

The International Monetary Fund may change its rules under US pressure and provide financial assistance to Ukraine, despite its unpaid debt to Russia. This move would discredit the IMF and create favorable conditions for the strengthening of an alternative Russian-Chinese project, DWN wrote.

The International Monetary Fund is considering amending its own rules, to be able to provide financial support for Kiev, DWN wrote.

According to the newspaper, this would negatively affect the reputation of the institution as under the current rules the IMF cannot provide loans to a state that has to repay an outstanding debt to another country.

The debt dispute between Russia and Ukraine is still going on. In December, Ukraine has to repay the debt amounting to three billion dollars. If Kiev won’t do this, the current rules would force the IMF to cancel a $ 17.5 billion loan agreed for Ukraine, the newspaper noted.

In the middle of October, Ukrainian Prime Minister Arseniy Yatsenyuk threatened to file a lawsuit against Russia, if Moscow does not agree to restructure the Ukrainian debt and partially write it off.

Finance Minister Anton Siluanov noted that Russia and Ukraine could not come to an agreement on the restructuring of Ukraine's $3 billion sovereign debt, noting that Russia would demand the full repayment of Ukraine's Eurobonds by December.

If the US-led IMF violates the provision, "it actually would discredit itself as an international organization." According to the newspaper, the main part of the IMF's resources consists of taxpayers' money from other countries, including Germany and Russia.

If the fund tries to change the rules, it would demonstrate that the IMF was "a political tool of the US government" and make other countries lose their trust in the institution, the newspaper wrote.

The author also mentioned that this move would accelerate the implementation of Beijing’s and Moscow’s plans to further develop projects as an alternative to those led by the US. 

In October 2013, China initiated the creation of the Asian Infrastructure Investment Bank (AIIB) designed to provide financing for infrastructure projects in the Asia-Pacific region. The bank is viewed as a competitor to major development institutions as the World Bank and the IMF and is likely to become a major arena for China- Russia cooperation.